Keynote Speech by Mr Edwin Tong SC, Minister for Culture, Community and Youth and Second Minister for Law at the 7th International Chamber of Commerce (ICC) Asia-Pacific Conference on International Arbitration
22 June 2022 Posted in [Speeches]
Ms Claudia Salomon President of the ICC International Court of Arbitration
Mr Alexander Fessas Secretary-General of the ICC International Court of Arbitration
Friends and colleagues from here and overseas
- Welcome to Singapore.
- It is such a pleasure to be back here in-person, to be able to, not just listen to great speeches and engage in dialogue, but also to make new friends, and be re-acquainted with old ones.
- Very happy speaking on a topic that is very close to my heart.
(a) I spent my time in practice in Allen & Gledhill. At that time, I was involved in a fair number of arbitration cases, starting in the early 1990s, when arbitration was not quite the thing yet in Singapore.
(b) I joined the Government in 2018 and whilst I have a different perspective looking at arbitration from a policy angle, there are many similarities as well.
(i) In practice, what was foremost on our minds was how to compete with firms globally for a piece of the work, when we make a pitch for cases.
(ii) At my Ministry, I found in many ways, I have been doing the same thing – to pitch for work to come into Singapore, so that the best talent and thought leaders can be located in Singapore. This includes facilitating work that is being done by ICC along with many other international legal organisations, such that it is done efficiently and effectively – really to be business-conscious about how we do so in Singapore.
- Since this is the ICC Asia-Pacific Conference on International Arbitration, I thought I would cover three broad areas:
(a) First, to take a look at how we see Asia-Pacific’s economic position and outlook, and the impact and prospects it will have on legal work; the growth and importance of the Asia-Pacific region is not to be underestimated.
(b) Second, international arbitration and ICC; and
(c) Finally, to give you a perspective on how Singapore looks at these topics – growth areas, thought leaders, ICC in Singapore, and the role of not just arbitration, but all forms of dispute resolution mechanisms.
- Coming on the back of the first panel session this morning, where speakers from Australia, China, Hong Kong, India, and Philippines talked about recent arbitration developments in the Asia-Pacific region, and how they impacted arbitration practices, I hope what I will say will give you a sense of the perspective, looking through the Singapore lens, particularly the Singapore policy lens.
Asia-Pacific’s Economic Position and Outlook
- First, let me spend a bit of time on the Asia-Pacific’s economic position and outlook.
- Asia-Pacific is the largest continental economy, and the fastest growing economic region in the world today.
(a) According to World Bank’s data, the annual growth rate of its GDP pre-Covid (in 2019) was around 4%, significantly higher than the global average of 2.6%;
(b) Asia-Pacific’s share of global GDP was more than one-third in 2020, which was more than double its share just half a century ago;
(c) This is expected to increase even further, and reach 40% by 2030, and more than 50% by 2050.
- This trend in my view is likely to continue, because of the broader trends defining this region in the coming decades –
(a) Rapid urbanisation, and huge infrastructure development. The need for infrastructure in this region is estimated by the Asian Development Bank to be at US$1.7 trillion annually – that gives a sense of the scale of growth in the region – and there is an influx of talent coming in to do infrastructure work;
(b) Younger and a better-educated population, particularly in Southeast Asia, which encourages companies to set up operations here, to tap on the increasingly skilled workforce; and
(c) The growing middle class in the Asia-Pacific region, which drives higher consumption of goods and services.
- At the same time, this region is also open to international trade.
(a) Two of the world’s largest plurilateral trade agreements – the Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) – are both anchored in Asia.
(b) Just last month, U.S. President Joe Biden launched the Indo-Pacific Economic Framework for Prosperity, with 13 Asia-Pacific countries.
- The combination of all these factors makes the Asia-Pacific region attractive and really ripe for foreign investment. Since 2020, Asia-Pacific has been a top destination for inward foreign direct investment (FDI). Being strategically located in this region, Singapore is in a good position to capture much of these FDI. In fact, at present, Singapore is the second largest recipient of FDI within Asia-Pacific, second only to China. About one-fifth of our FDI came from within the region, and the remaining from outside.
- Investors are attracted to Singapore for a number of reasons:
(a) Socio-political stability;
(b) Business-friendly environment;
(c) Extensive double tax treaties, a very competitive tax regime; and
(d) A trusted legal system, grounded and based on the strong rule of law, which is very established.
- We know that in every commercial decision, there will be disputes. The question is, can these disputes be resolved in accordance with the rule of law transparently, openly and efficiently?
- I would stress that Asia-Pacific’s or Singapore’s growth does not mean that other regions will stop growing. It is not a zero-sum game.
- The global economy is inextricably linked. Today, we depend on each other hugely for goods, services, talent, and ideas. The fortunes, or indeed misfortunes, in one corner of the world can result in important consequences, even in faraway destinations.
(a) Take the Russia-Ukraine war for instance. A conflict between two countries has triggered seismic repercussions on other parts of the world:
(i) Rising food and energy prices, being the most direct consumer impact we see today.
(ii) Disrupted supply chains, which has led to goods and services being more expensive.
(iii) Turmoil in the financial markets – you see volatility in the DJI, NASDAQ and FTSE, and the erratic impact that this has had on our markets.
- Conversely, if Asia-Pacific is able to enjoy stability and prosperity, the rest of the world can thrive.
- That is why whenever Hong Kong experiences civil and political unrest, we are concerned in Singapore. Even though many people think that this translates into an opportunity for Singapore, that is not the case. Our Prime Minister has said that our fortunes are interlinked – if Asia Pacific thrives, we thrive in Singapore.
International Arbitration and ICC
- This brings me to my second point on international arbitration, and the ICC.
- Arbitration is about resolving the disputes that will arise in commercial settings, and it is fundamentally about restoring the peace between parties.
(a) It is a means for commercial parties to adjudicate and resolve their disputes, so that they can move on, and then contribute to the economy meaningfully.
- Today, arbitration is still the dispute resolution mechanism of choice. A 2020 survey by the Singapore International Dispute Resolution Academy (SIDRA) found that 3 in 4 respondents had used arbitration to resolve their disputes between 2016 and 2018.
- Given its present popularity and prevalence, we do need to constantly innovate, to think about advancements, to meet the changing needs of businesses. As I said earlier, it is fundamental that the rules, the process, and our procedures revolve around how we serve the business community best – it is not the other way round.
- An obvious example is the increased use of technology in arbitration proceedings – in many ways forced on by the COVID-19 pandemic, but something that we will have to live with, on a day-to-day basis.
(a) This is not without its own set of challenges.
(b) Earlier this year, a Working Group, established by the ICC Arbitration and ADR Commission, found that, among the 500 survey respondents, 26% of respondents noted a barrier to technology, and 26% noted issues in respect of fairness and equal treatment in such hearings.
- Another technology-related, but separate challenge, is the complexification of disputes in the digital age. Take for instance, autonomous vehicles – where legislation today in many parts of the world is still trying to catch up with technology, and case law has not yet been built up. Who will be responsible for a decision that was made by the result of an algorithm?
- Even seemingly traditional areas, like intellectual property (IP), are also becoming increasingly multi-faceted, with the rise of non-fungible tokens (NFTs), metaverse, and the like. Do we have experts who understand these issues, and can make a fair decision? After all, that is central to every arbitration case.
- Although I spoke about these challenges in the context of arbitration, it applies to all forms of dispute resolution.
(a) One of the key reasons why parties usually prefer arbitration, is the ability to enforce the arbitral awards cross-border.
(b) On this issue, there are currently 170 contracting parties under the New York Convention.
(c) In contrast, the Hague Choice of Court Convention has 8 signatories and 6 Parties, while the Singapore Convention on Mediation currently has 55 signatories and 10 Parties.
(d) I am hopeful that more countries will come on board soon, especially on the Singapore Convention on Mediation, given the many advantages of mediation – faster, cheaper, more flexible, win-win outcomes to protect and preserve the hard-won, and often long-term relationship between the parties.
- When I visited ICC in Paris last year, this was a point which Claudia and Alexander made to me:
(a) It is not about whether companies choose arbitration, mediation, or litigation, but about how we can help them to resolve their disputes when they arise, and quickly get them back to business. That is ICC’s focus, and I think it is the correct focus. It is not about getting embroiled in a long arbitration.
(b) It is therefore important to raise awareness among users, so that they make informed decisions, when their contracts are being drafted.
(i) Very often, as a dispute resolution lawyer, we are called in just as the parties are about to sign the agreement. The dispute resolution clause is often known as the midnight clause – one that is drafted hurriedly, as we approach the midnight hour, when parties are trying to wrap up the deal;
(ii) But this is an important clause, that you need to pay a lot of attention to, and spend time negotiating upfront.
- ICC’s mission “We make business for everyone, every day, everywhere” is very much aligned with how Singapore views dispute resolution.
(a) We provide dispute resolution services to support businesses, not to encourage disputes, but to the disputes resolved meaningfully – in Singapore.
(b) We continually review our legislation, policies, frameworks, and services, because we want to make it marketable, commercial, business-oriented, efficient, effective, and convenient for parties when they come here.
(c) Take IP dispute resolution, for example. Intangible assets now comprise 90% of the value of S&P 500 companies. IP disputes will inadvertently increase. So, we moved recently to make amendments to our International Arbitration Act as well as the Arbitration Act, to make clear that IP disputes are arbitrable in Singapore. We launched a new IP arbitration course at NUS Law – first of its kind, as well as courses for expert witnesses acting in IP disputes.
(d) It is really about knowing and understanding what the users want and need, and making sure that we can support them across the entire spectrum. It is not just about building Maxwell Chambers across the road, or its software, but also the entire value chain and the ecosystem – from learning at universities, to ensuring that parties have access to suitable arbitrators and experts for their disputes.
- I think this alignment of ideals, is the reason why Singapore has been a strong, long-standing partner of ICC.
(a) Our Chief Justice Sundaresh Menon sits on the ICC’s Governing Body for Dispute Resolution Services.
(b) Our former Attorney-General VK Rajah is one of the Vice-Presidents of the ICC Court.
(c) ICC also has a substantial footprint in Singapore – with a regional office, a case management office, and an academy here.
(d) We are now discussing how we can further deepen that collaboration, and expand and deepen ICC’s presence in Singapore.
- From my point of view – pardon me as I could be somewhat biased here – there is every reason to use Singapore as a base to serve the region.
(a) Singapore is one of the most preferred seats of arbitration in the world today, and is ICC’s top seat of arbitration in Asia for 11 consecutive years.
(b) We are principally a business and financial centre – home to many international companies operating out of Singapore, to serve the region.
(c) We are within a 7-hour flight radius to major markets of China, India, Japan, Korea, Southeast Asia, and Western Australia, in the Asia-Pacific region with 4 billion people – that is half of the world’s population.
- So, we look forward on this basis, and we share ICC’s optimism and recognition of the importance of Asia-Pacific, that we can grow in this area. Hopefully, we can do this with an expanded partnership with ICC.
How Singapore Fits In
- Finally, let me touch on how Singapore fits into this ecosystem.
- In Singapore, we pride ourselves on working with like-minded partners who deliver the best in the service. In many ways, we are agnostic to the nationality of the party providing that service – as long as you can deliver good services in Singapore that are needed, you are welcome.
(a) Singapore is small, with no natural resources – you can fit about 770 Singapore into Paris!
(b) At the same time, we have grown in terms of our GDP. We started with a GDP per capita of US$600; today, it stands at US$60,000.
(c) We believe that this could not have been done by being a closed economy. We need to be an open economy, welcoming of international partners, and ensuring that the best talent, best officers, best know-how and thought leaders are located in Singapore. We believe that external competition and domestic competitiveness are not mutually exclusive.
(i) Shielding local companies from foreign competition in general does not mean that local companies will automatically do well.
(ii) On the contrary, our experience has shown that it is often the competition that pushes and drive our local corporations, our local innovation, to do even better.
- A key feature of economic development has therefore been to encourage foreign businesses to make Singapore their home, and to set up high-value functions and headquarters here.
(a) Today, 46% of Asia’s regional headquarters are based in Singapore, across a diverse range of industries – the highest concentration anywhere in the Asia-Pacific.
(b) Many MNCs have also chosen to locate their global headquarters in Singapore.
(i) Recently, Dyson opened a new global headquarters, and will invest S$1.5 billion in Singapore operations over the next four years.
(ii) Big Data Exchange (BDx) also announced that they would move and relocate their global headquarters to Singapore.
- These, and many others, are not steps that happened by chance. They were very deliberate steps by the Singapore Government, to ensure the right business environment.
- Coming back to arbitration as a sector – an area that I started practice in close to 30 years ago,
(a) At the time, the Singapore International Arbitration Centre (SIAC) was just established in 1991. It had two cases in its first year. There were no other arbitral institutions in Singapore.
(b) We had just amended, back in 1992, the Legal Profession Act, to allow foreign lawyers to represent foreign parties in international arbitrations.
(c) There were few or no foreign law firms practising international arbitration from Singapore.
(d) Even most local firms did not have a dedicated international arbitration practice.
- That of course, was 30 years ago, and is a very different landscape from what we see today.
(a) Today, SIAC is one of the most preferred arbitral institutions in the world.
(b) There are many other leading arbitral institutions in Singapore, managing cases in and out of Singapore: ICC, Permanent Court of Arbitration (PCA), American Arbitration Association International Centre for Dispute Resolution (AAA-ICDR), and the World Intellectual Property Organization Arbitration and Mediation Centre (WIPO AMC).
(c) Foreign law firms and lawyers can now provide Singapore law-related services in international arbitration. There are presently at least 60 foreign law firms in Singapore, and about 180 foreign lawyers practising international arbitration in or out of Singapore.
(d) Our top Singaporean firms have a vibrant international arbitration practice.
(i) The largest of them – Allen & Gledhill, Drew & Napier, Rajah & Tann, and WongPartnership – are all listed in Global Arbitration Review (GAR) 100.
(ii) Our Singapore lawyers are constantly ranked among the top in the Asia-Pacific region by respectable publications, such as Chambers & Partners and Legal 500.
(iii) Our experience, at least in this field, has shown that the practice of international arbitration by local domestic practitioners has not been decimated by competition. Instead, they have become stronger. That is the kind of model we want to build moving forward.
- That is why we believe this is good, not just for our arbitration sector, but for businesses in Singapore as well. Businesses want to be able to access the best people, to ensure that the services are offered at the top and highest levels. It does not matter to them, whether they are locals and foreigners. We recognise this, and will continue to remain open to entities and individuals who can contribute to Singapore.
(a) On this, we have various schemes in place. Just to give you a broad sense, for individuals:
(i) We have the Global Investor Programme, which provides a pathway for entrepreneurs and business owners with a proven track record to relocate to, or invest in Singapore.
(ii) We have the Tech@SG Programme, which helps to facilitate the entry of global technology talent into Singapore.
(b) These are just a couple, but if you look at the wider offerings of EDB and ESG, we constantly look at sectors in which we need to bring talent into Singapore, and we think of ways, incentives, subventions, rebates, tax schemes and so on, to make sure you have a home in Singapore.
- I would say that all these policies and institutions are not unique to Singapore. I think they can be found elsewhere, and if not, they can be quite easily or readily replicated. For example, institutional rules like emergency arbitrator, expedited procedures, joinder and consolidation provisions. ICC and SIAC were the first institutions to introduce them. But very quickly, other institutions followed suit, learning from one another.
- This also extends to infrastructure. We set up Maxwell Chambers many years ago. It was the world’s first integrated dispute resolution complex, housing purpose-built hearing facilities, and top international dispute resolution institutions. Today, we do see the same model in many other cities. Some of these cities can afford to have much larger facilities than what we have in Maxwell, because they have a higher volume and they are also not as constrained as we are, by space.
- I think, overall, we are all the better for it. We should, and we must, learn from one other. There is no need to reinvent the wheel when we do not need to.
- What matters critically is not the individual parts, but rather the sum of the parts as a coherent whole.
- This is what sets Singapore apart.
(a) We collaborate actively across businesses and institutions. Relations amongst government, academia, the Bar, the Bench, are all very strong. We are all very mindful of the fact that we need to put in place legal frameworks in many respects, not just in arbitration, that can move the needle on economic and commercial practice.
(b) We are therefore able to work cohesively together, build common grounds, and work towards a shared goal.
(c) This enables us to work faster, move quickly, without undue resistance.
- Let me give you an example. Some years ago, we had the vision to develop a full suite of international dispute resolution services – not just in arbitration which we had developed by that time, but also litigation and mediation.
(a) Take the case of the Singapore International Commercial Court (SICC):
(i) Chief Justice Sundaresh Menon mooted the creation of a SICC at the Opening of the Legal Year in January 2013;
(ii) In May 2013, a committee was set up.
(iii) In November 2013, the committee released its report with its recommendations.
(iv) Public consultation was conducted in December 2013 and January 2014.
(v) The framework for the establishment of the SICC was finalised in the fourth quarter of 2014.
(vi) The SICC was launched in January 2015.
- When we set our mind to something, we can move very quickly.
- At the same time, to be able to do this takes a lot of trust from various stakeholders. Each one of them believing that we are doing this for the benefit of Singapore. Each one of them pulling their weight, to make things happen. This trust takes time to build, between the Government and other stakeholders – including foreign lawyers practising in Singapore or coming to Singapore for a case. All of you are stakeholders in this landscape.
- With this, I would like to take the opportunity to round this up.
- I hope that all of you will use this as opportunity to gather in person again, to not just exchange ideas, but to think about how you can build up a practice in Singapore, exchange information, and also deepen your relationships, because at the Bar, we believe that for all the technical know-how, all the expertise, what really keeps the Bar special in Singapore, are the interpersonal relationships and camaraderie between members of the Bar. When we have this, it is less of a me-versus-them approach, but a how-we-grow-the-entire-Bar approach. That is why in Singapore, we have taken this approach of being completely agnostic, nationality-wise, as to who can deliver the best services to us in Singapore.
- On that note, thank you very much for having me here. I wish all of you a good day ahead, and please do leave Singapore with at least some connection with old acquaintances or some new ones.
- Thank you.
Last updated on 22 June 2022